May 28, 2017

Top 10 factors which are likely to chart direction for market this coming week

The Nifty created history this week as it climbed 9,600 and hit a fresh record high of 9,604.90. It rallied 1.7 percent for the week ended May 26 to close at 9,595.
As D-Street celebrated 3 years of Modi-led government in office, the index regained strength to take out key resistance levels this past week. The index is now trading in uncharted territory.

The S&P BSE Sensex rallied 564 points this week to hit a record closing high of 31,028.21. It hit an intraday high of 31,074.07.
However, there was some correction in the broader market. The S&P BSE Midcap index closed 124 points lower, while the S&P BSE Smallcap Index ended 140 points down.
Sensex attaining 31,000 level is one more milestone in this up move with the latest rise of 1000 points taking just one month. Sensex grew 20% from its recent bottom in just 5 months. We seem to be headed higher with or without some intermittent corrections thrown in.
The market might tread with caution or consolidate in the coming week after a sharp rally. But, the long-term trend still remains intact. Investors are advised to use any dip to accumulate quality stocks and not bother about valuation too much.
People believe that valuations have run up too high and earnings are yet to catch. This is when they look at the issue with historical perspective and low PE multiples in a low growth and high-interest era. But the new normal of PE will be much higher because PE starts with reciprocal of interest rate and you add growth and reduce risk. That is the theoretical framework but as interest rates head down, PE multiples will get stabilised at a higher level.

Below are the list of ten factors which are likely to chart direction for the market this coming week
Nearly 2,000 companies will report Q4 results this week
As much as 1,850 companies are scheduled to report their results from May 29 to May 31 this coming week which includes prominent names like BPCL, Coal India, NTPC, L&T, Power Finance Corporation, Power Grid Corporation of India, Hindalco Industries and Mahindra & Mahindra.
GDP data for Q4
The government will unveil GDP figured for the quarter ended on May 31, Wednesday.
Gross domestic product (GDP) had grown marginally lower, at 7 percent, in the third quarter of FY17, down from 7.4 percent in the second quarter.
India’s economy is expected to grow at 7.1 percent in the fourth quarter of FY17, as remonetisation has gained steam, Icra said in a note earlier this week.
Global investment bank, Nomura in a note said that the new series for industrial production and wholesale prices suggest that the GDP numbers for the financial year 2016-17 could be revised up from 6.7 per cent to 7.4 per cent.
The Central Statistical Office (CSO) revised India’s wholesale price index (WPI) and industrial production (IP) series last week, changing the base year to 2011-12 (from 2004-05).
May Auto Sales numbers
Four and two-wheeler stocks will be in focus in the coming as auto sale numbers for the month of May will be announced starting from June 1. Stocks like Maruti Suzuki, Hero MotoCorp, Bajaj Auto and Ashok Leyland will be on the watch list.
India Macro Data
Market Economics will announce the India Manufacturing Purchasing Managers' Index (PMI) data for May 2017 on Thursday, 1 June 2017. The Nikkei Manufacturing PMI in India stood at 52.5 in April 2017, the same as in March.
Eye on Monsoon
The India Meteorological Department (IMD) has assessed that conditions are favourable for the South-West monsoon to enter South Kerala and the North-Eastern States on May 30-31.
The arrival of monsoon rains and its progress will be closely watched. The South-West monsoon is likely to make its onset over South Kerala during May 30-31, around the time earlier predicted by India Met Department (IMD.
The June-September South-West monsoon is critical for the country's agriculture because a considerable part of the country's farmland is dependent on the rains for irrigation.
Global Cues
On the global front, China Caixin manufacturing PMI data for May 2017 will be announced on Thursday, 1 June 2017. US Market Manufacturing PMI for the month of May 2017 is slated to be released on Thursday, 1 June 2017. US nonfarm payrolls data for May 2017 is scheduled to be released on Friday, 2 June 2017.
BSE to delist 61 companies from May 29
Leading stock exchange BSE (Bombay Stock Exchange) will delist as many as 61 firms from its platform from 29 May as they have remained suspended for more than 13 years.
Among the firms to be delisted are Binaca Synthetic Resins, Canvay Chemicals, Chetak Spintex, Global Industries, Karan Finance, Mahendra Cements, Manav Pharma, Maruti Organics, Rams Transformers, Regent Chemicals, Rohini Strips, Sarla Credit & Securities, Sunrise Zinc, Thapar Exports and Vishal Chairs.
PSP Projects to list on bourses on May 29
PSP Projects IPO was oversubscribed 8.58 times, with the qualified institutional buyers (QIBs) portion getting oversubscribed 8.38 times, non-institutional investors 10.39 times and retail investors’ portion 6.47 times.
It had fixed a price band of Rs. 205—210 per share for the offer, which was open from May 17—19.
Technical Outlook
The Nifty had formed a bullish wedge pattern on the hourly chart over the last few sessions, which had broken out on the upside in the last session.
On Friday, the index witnessed a sharp follow through on the upside. Investors are advised to hold their long positions as long as Nifty hold 9,300-9,340.
On the way up the all-time high of 9532 has been surpassed and the benchmark index tapped at the 9600 mark. In terms of wave structure, Nifty formed fourth wave correction, which got over at 9341 & it is now forming the fifth leg of an impulse on the upside.

On the weekly chart, Nifty has formed a bullish outside bar, which reinforces the uptrend. Thus there is scope for Nifty to extend beyond the short term target of 9655 & head towards the medium-term target of 9,850. On the flip side, 9,340-9,300 will continue to act as a major support area.